If you want to start a home-based business, you’re among the 200,000+ Singaporeans who own such micro-companies. It’s always good to have passive income. Whether you sell home-baked goodies, tutor, or craft baby toys, the market will welcome you with open arms.
There’s a problem, though.
Although running your home-based business is convenient and comfortable, you can have some restrictions. For example, while you can run your company from an HDB flat, the government will impose specific rules to watch out for. You’ll have to be wary of scams that are increasingly popular in Singapore.
So, without further ado, let’s see how you can establish that dream business of yours and drive it smoothly to success.
Government Schemes To Know About
Singapore’s government has established two schemes regarding home-based businesses that operate from HDB flats:
– Home Office Scheme:
• It’s best for setting up home offices in HDB flats.
• You need a one-time Home Office Permit.
• You can employ a maximum of two non-residents who work from your apartment.
• You have to register your company with ACRA.
– Home-Based Small Scale Business Scheme:
• It lets you run a micro home-based business from your HDB apartment.
• You don’t need any permit or approval.
• You can’t employ anyone else.
1. The Home Office Scheme
The Home Office Scheme addresses people who want to operate their home offices from HDB flats. Isn’t that just working from home, though?
Here’s the main difference:
Working from home is you being employed by someone else and doing your job from under a pillow fort. A home office means you can hire up to two people who aren’t living with you and who’ll work from your pillow fort.
Although that sounds pretty straightforward in theory, the government has established several rules:
• You have to keep your business activity in your HDB apartment alone. So no, you can’t work from the common barbecue area.
• You have to be very, very quiet, even though you’re not hunting rabbits. You mustn’t disturb your neighbours with anything, including sounds, smoke, other smells, or dust.
• You shouldn’t conduct illegal or immoral businesses. For example, you can’t operate a gambling company from your HDB apartment, and you can’t offer sexual services.
• You can’t spam people. So, no door-to-door selling stuff to your neighbours or aggressing them with flyers. In fact, you can’t even display any ads or posters. EVER. Luckily, there’s Instagram and Facebook to solve that problem.
• You shouldn’t be dangerous. The company you’re operating has to be safe for your neighbours and their property, so no cooking meth there either. You’re not in Breaking Bad, anyway.
• You shouldn’t consume more electricity or add more structural load than allowed because that would be dangerous for the entire building.
• Your business should be morally upright. Your home office shouldn’t mess with the residential estate’s ambience and personality.
• You need the proper licenses and approvals. You can’t run your home-based business office until you have all the required paperwork. So, apply for your Home Office Permit and don’t start anything until you get it. You don’t need to re-apply for it unless you’re changing businesses.
Warning: You can only apply for the Home Office Permit if you’re that HDB flat’s owner, tenant or authorised occupant.
Besides, if you aren’t the owner, you’ll need their written consent to start that home-based business. If you need to look for a new property, consider these property agents here.
2. The Home-Based Small Scale Business Scheme
This business scheme allows you to follow your dream job from the comfort of your apartment. You can use your HDB flat to start a bakery, an accounting service, or a photo studio. These small-scale activities will increase your income considerably.
But you have to do things above the board.
For example, you shouldn’t hire people who aren’t residing in your apartment to work for your home-based company.
And of course, you have some other rules to follow:
• You can’t register your HDB apartment as a business address, even if you’re running your micro-company from it.
• You shouldn’t disturb your neighbours. For example, you can’t have people coming in and out of your apartment constantly. You also have to be very careful if you’re running a bakery from inside your house. So, avoid annoying noises, smells, litter, or traffic.
• You shouldn’t bring heavy appliances or equipment not designed for home use. For instance, you can’t get an industrial oven to bake your pizza.
• Make sure your business doesn’t require extra staff or additional storage capacities. Remember that you have to run that company inside your apartment without other staff.
• A massive movement of goods is also prohibited. Thus, you could technically leave your home a few times per day with packaged muffins, but you can’t treat your flat like a distribution centre.
• You can’t show physical or paid ads, like posters on your doors or walls.
• You have to follow food safety and hygiene regulations. You’ll find these rules on Singapore Food Agency’s website.
• You should also learn how to protect your home-based business from fire, so read the rules on the Fire Safety and Shelter Department’s website.
Here are some examples of allowed home-based businesses under this scheme:
– Small-scale baking
Hairdressing
– Facial and beauty (but no massages)
– Manicure and pedicure
– Private tuition for up to three students
– Sewing
– Freelance artists, writers, or photographers
Pro tip: Keep your home-based business to a limited scale. If you get more customers and/or the neighbours alert the authorities, you’ll be asked to move to a more suitable space (e.g., commercial or industrial).
What Are The Allowed HDB Home Businesses?
Not all home-based businesses are permitted. The Home-Based Small Scale Business Scheme looks more flexible than the Home Office Scheme, which allows few services, such as:
– Accountancy
– Architectural business
– Consultancy
– Design
– Advertising
– Insurance
– Financial planning
– Real estate
– Tech-based
– Trading office
Also, here’s a list of home-based businesses that can’t get licenses through the Home Office Scheme:
– Beauty saloons
– Hairdressers’
– Massage therapy
– Contractors businesses
– Car trading companies
– Card or palm readers
– Fortune tellers
– Caterers and restaurants
– Clinics and pharmacies
– Commercial schools
– Courier services
– Classes on making dresses and embroidery
– Employment agency
– Funeral chapel/home
– Maid agency
– Mausoleums
– Making or processing products/goods
– Moneylending agencies
– Opticians
– Repair-based businesses (e.g., appliances, electrical devices, footwear)
– Sales/marketing activities that imply holding classes or talks for large groups
– Shops and all retail activities
Luckily, if you run any of the businesses above at a small scale, you can be part of the Home-Based Small Scale Business Scheme. This program lets you run your micro-company however you want, without applying for a permit first.
Remember, though, that you’ll have to follow the guidelines we discussed above.
HDB Home-Based Business During COVID
The COVID-19 pandemic is still wreaking havoc even after the emergence of vaccines and new treatments.
Thus, businesses of any scale should follow the current hygiene and distancing requirements. Singapore’s government:
• Asks you to respect the Safe Management Measures in place. Make sure to double-check any updates according to the current epidemiological situation.
• Use SafeEntry or TraceTogether to track the customers and visitors entering your premises.
If your home-based business involves food, you have to follow additional rules, including:
• You can deliver the products yourself or hire a third party to do that. Your customers can collect the food themselves, too. However, you have to follow all the hygiene and safety rules in place.
• Delivery and collection should be contactless. That means you have to keep at least 1 meter between the people involved in the delivery process (e.g., you, the delivery person, and the customers). You also have to wear masks when you deliver the goods or when your customers come to pick these up.
• Customers should make appointments. You can’t have multiple people crowding at your doorstep and not following distancing protocols.
• Deter your customers from using cash. Instead, ask them to use cashless methods.
• Use SafeEntry to track who’s coming in and out of your apartment.
• Use TraceTogether to facilitate contact tracing if one of your customers is diagnosed with COVID-19.
• Make sure people handling the food respect the food safety and hygiene norms. These rules should be respected when making the food and managing it otherwise.
Tips For Home-Based Business In Singapore
Now that you know the basic regulations regarding home-based businesses in Singapore, let’s see how you start yours.
1. Funding
Home businesses are easier to start because they don’t require as much capital as large companies. For example, your small-scale vegan bakery can probably start with $1,000-$3,000.
There’s a catch:
Many people underestimate their necessary expenses. Therefore, they struggle to meet their orders because they can’t manufacture/deliver the promised products.
You can avoid that if you evaluate or production and operating costs, including necessary equipment. You will be able to get sufficient funding for your business with the right financial institution.
2. Arranging Your Space
Some people working from home change places depending on their moods or the life that’s taking place around them. For example, if you feel tired and your kids jump on the bed, you’re tempted to hide under the blankets.
Even if you run your business from home, it should still feel like you’re doing a job. So, make sure your workspace is work-conducive and professional, with as few distractions as possible.
Don’t forget about the furniture and equipment that the job demands.
If you’re running a home office, you’ll need a desk and comfortable chair, plus office supplies. If you’re running a home bakery, make sure the necessary appliances and ingredients fit in your kitchen. Check out our list of the best 100 furniture shops in Singapore for all your business needs.
3. Connecting to People
If you own a home-based business, you’re most likely running it through a website or social media. As such, you have to consider all the problems associated with this setup:
– Communication methods that can fail (e.g., your internet connection)
– Difficulty engaging with your customers because you can’t interact face-to-face in a physical store
So, think of all the possible channels to stay connected with your customers and build a brand community. You can consider social media, but also phone calls and direct e-mails.
4. Your Business Plan
Even the most brilliant ideas can fail if they are not backed by a well-thought strategy. Your business plan has to be very thorough, so:
– Start with your goals. Make sure your objectives are SMART (specific, measurable, achievable, realistic, and timely).
– Set accurate KPIs (Key Performance Indicators) that will help measure your success in the market. These indicators should be concrete and cover all the aspects of your business, from revenue, profit margin and client retention rate.
– Think of a thorough strategy, but always have a plan B in place. It’s wise to be prepared, but you also have to stay flexible.
– Think of possible crisis scenarios and prepare solutions for them in advance. For example, what will you do if your internet connection fails right when you’re in the middle of an important phone call? What if your oven breaks right before making an important delivery?
– Have an advertising strategy in place for at least the following months. Remember that you’ll have to adapt that strategy once your business becomes better known.
5. Proper Business Practices
Running a home-based business doesn’t mean you have to be sloppy. So:
– Open a business account
– Keep track of your income and expenses
– Have proper contracts in place
– Keep your invoices and receipts
Ready To Start Your Home-Based Business In Singapore?
Singapore is one of the best places in the world to run a home-based business from.
Firstly, starting that business is pretty straightforward, and you need very few documents. Secondly, the rules aren’t as confining as in other countries, although running your business from an HDB apartment requires slightly more preparation.
However, sound planning is everything.
Try to get enough funding before starting your business and ensure you won’t annoy your neighbours. Next, come up with a sound plan that will help you pass through the first year in the market, which is the toughest you’ll experience.
Don’t forget to keep track of your paperwork and invoices too!
After that, try to remain diligent and prepared, but also flexible. Running a company is challenging, even on a small scale.